Trump calls Fed Chair Jerome Powell a “fool” for keeping interest rates steady

President Trump took aim at Federal Reserve Chair Jerome Powell once again, criticizing him for not cutting interest rates at the Fed’s recent meeting. In a post on his Truth Social app, Trump called Powell a “fool” for acting “too late” in adjusting the central bank’s benchmark rate. This criticism comes as the Bank of England decided to reduce its main interest rate to 4.25% due to concerns over the potential impact of the Trump administration’s tariff policies on global growth.

The Federal Reserve last cut rates in December 2024, bringing the rate to a range of 4.25% to 4.50%, where it currently stands. Powell defended the Fed’s decision to hold rates steady, citing positive economic data and the need to assess the effects of Trump’s economic policies before making any changes. Trump, however, claimed that there is “virtually NO INFLATION,” despite inflation rising 2.4% annually in March, slightly above the Fed’s target of 2%.

Powell has emphasized the importance of the Federal Reserve’s independence from political influence, stating that it allows the central bank to make decisions based on economic data rather than political pressures. Economists agree that central bank independence is crucial for maintaining low inflation and full employment. Trump’s repeated calls for rate cuts could backfire, as they may undermine confidence in U.S. policymaking and the dollar.

Will Denyer of Gavekal Research warned that Powell must avoid giving in to Trump’s pressure for rate cuts to maintain confidence in U.S. policymaking. By pressuring Powell to lower rates, Trump could inadvertently create a situation where Powell needs to proceed cautiously. This pressure from the President could create a self-fulfilling prophecy and hinder the Fed’s ability to act independently.

In conclusion, Trump’s criticism of Powell and the Federal Reserve’s decision to hold rates steady reflects the ongoing tension between the White House and the central bank. The Fed’s independence from political interference is crucial for making sound economic decisions, and Powell’s commitment to data-driven decision-making is essential for maintaining stability in the economy. It remains to be seen how Trump’s pressure on Powell will impact future monetary policy decisions.